“You have very little to do in your life until you do too many bad things” – Warren Buffett
Buying life insurance is one of the best decisions you will ever make in your life. The motivation behind it can vary from one source to another, but the primary objective must remain the protection of your loved ones. If you throw your net wide enough, you will learn that someone or a family whose life has been devastated due to lack of foresight and planning on the part of those responsible for it.
Here are some mistakes you can avoid when purchasing your life insurance:
1] The purpose of the insurance purchase is imperfect
Most people buy life insurance to save income tax. Or invest and save money for the future. The sole purpose of life insurance is to financially protect your dependents in the event of sudden death. Any other goal you have in mind must be pushed aside in the face of this overwhelming need.
2] Underestimate your insurance needs
Imagine a scenario in which you have life insurance, but in the unfortunate event of your death, the coverage is not enough to support your family and leaves them in a financial crisis. The very purpose of buying life insurance will be defeated. The amount of coverage you get should be based on your income, your family’s lifestyle, your loans, and your goals for the future.
3] Give on the spouse who does not work
Even if they do not make a monetary contribution to the household, the value they bring should not be overlooked. In the event of death, you may need to ask for help, whether for cleaning or raising your children. The amount of their coverage can be tricky, so it's best to make such decisions with the help of a professional.
4] Neglecting to appoint / update your appointment
Most of us ignore the importance of having the right person to take care of the family if you are not around. The subject of life insurance is canceled if the money does not reach the right hands. You must ensure that applications are not only updated in all policies, they are also subject to regular review.
5] Do not continue your policy
Almost all insurance policies require regular premiums to keep the policy active. While the enthusiasm of your life insurance agent will be alive and impressive during the policy making process, most agents will not do so once the conversion is complete and the initial commissions are kept. For your part, you have adopted the policy for a specific purpose and you must ensure its continuity. Your coverage should last for your working years.
6] Choose the wrong type of policy
There are many types of life insurance products on the market from different insurance companies offering products that meet different needs. Not knowing which policy best suits your needs and always buying the most vibrant product available is a common mistake. For the most basic insurance needs, a long-term plan is best for most of us. For those wishing to take out more insurance and add diversification to their well-balanced portfolio, various market-related products are also available.
7] Focus on the price, not the goal
Life insurance can't be something that you skimp on. When it is advisable to cover oneself against the risk of a contract, a common hesitation does not yield anything at the end of the contract. Other mistakes include reducing coverage to keep the premium lower and choosing an unreliable insurance company because they offer cheaper premiums. Let’s not be wise, but stupid when it comes to life insurance.
8] Deferral of the insurance purchase act
The sooner you buy, the better. Premiums will increase with age. You may develop a serious illness if you wait too long, which will prevent you from getting coverage or cost you more.
9] Do not review your insurance cover
Buying life insurance once is not enough. As your responsibilities increase, the amount of life you need also increases.
10] Reduction in the value of professional help
The rules of the thumb are a good place to start – 20 times your income can be a good cover when you are young. But they can't go that far to protect you and your family. For something as important as life insurance, you should seek professional help. Not only will they advise you on the right amount of coverage, but they'll help you avoid the wrong choices and keep you focused on the bottom line: protecting your family.